Africa as hospitality’s unchartered territory

Africa as hospitality’s unchartered territory

The rise of the middle class in emerging markets is leading to major shifts in the global hospitality sector. International hotel operators such as Intercontinental Group, Hilton Worldwide, Carlson Rezidor, Accord, Marriott and Starwood have seen the tide turning and are positioning themselves in Latin America, Asia and Eastern Europe. But it’s Sub-Saharan Africa (SSA) that remains the final frontier: the least developed region but with some of the greatest prospects.

Until recently 60 hotel brands represented around 30 major hotel groups in the African continent, with more than 50% of the hotel developers operating in five countries of North Africa and the rest in 50 SSA nations.

But that disparity between North Africa and SSA is shifting. Nigeria-based hospitality consultancy W Hospitality Group notes that SSA development pipeline grew 23% last year alone. As North Africa’s political upheavals takes their toll on that region’s hospitality sector, SSA has raced ahead with 130 hotels in development, compared to 77 in North Africa last year. Two years ago, SSA had 76 hotels under development, compared to North Africa’s 75.

ROOMS WITH THE LONG VIEW
It’s still not easy?to operate in Africa. While access to financing and better business regulations have eased hotel development in certain countries, infrastructure challenges continue to hinder developers and operators.

“Poor transportation infrastructure has historically restricted the connectivity of the sub-Saharan region,” said management consultancy EY. “Air travel remains limited despite investments from nations in airports and/ or local airlines, as seen in Kenya and South Africa.”

Construction remains expensive while poor road infrastructure and bureaucratic processes have led to construction delays.
“Given the aforementioned challenges, hotel operators and investors entering the market are often advised to collaborate with strong local partners and advisors to mitigate risks,” EY warns.